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LGT Navigator: Limited risk appetite on the stock markets

June 8, 2021

At the start of the week, risk appetite among equity investors remained largely subdued. The background to this remains the persistent uncertainty regarding the outlook for interest rates. The stronger the signs of a further economic recovery, the more likely it is that the three major central banks – the Fed, the ECB and the Bank of Japan – will have to adjust their monetary policies. The central bank heads are still emphasizing that the increased inflation trend is only a short-term phenomenon. Investors expect more information on this from the ECB, which will announce its decision on Thursday.

Limited risk appetite on the stock markets

On stock markets, inflation and interest rate concerns continue to dominate after US Treasury Secretary Janet Yellen caused a stir with a relatively relaxed stance with a view to higher interest rates. On Wall Street yesterday, however, tech stocks held up slightly better than standard equities, with the Dow Jones Industrial down -0.36% to 34'630.24 points, while the Nasdaq 100 managed a modest daily gain of +0.23% to close at 13'802.89 points. The broad S&P 500 was virtually unchanged at 4'226.52 points (-0.08%). A topic on the trading floor was also the impact of a global minimum taxation of large corporations such as Amazon, Apple, Amazon, or Google. The G7 finance ministers had agreed on a global minimum tax rate of 15%. However, the big tech stocks have hardly reacted to the news so far.

Japan's economy holds up better than feared at the start of the year

Japan's gross domestic product shrank at the start of the year from the previous quarter at an annualized rate of -3.9%. After the world's third-largest economy had recovered from the corona shock in the second half of 2020, renewed pandemic measures caused a renewed slump, which was now, however, smaller than the annualized -5.1% expected by the government.

Sentix economic indicator reaches three-year high

According to the latest survey results of the German financial market analysis company Sentix, investors' assessment of the economic outlook for the eurozone brightened considerably in June. The economic indicator climbed more than expected by 7.1 points from the previous month's value to 28.1 points – the highest value since February 2018. According to Sentix, the assessment of the current economic situation thanks to the easing of corona restrictions contributed to the increase. On the other hand, rising inflation expectations and, consequently, expectations of an adjustment of the expansive central bank policy had a negative impact.

Landmark Google ruling in France

Technology giant Google is paying EUR 220m in a landmark settlement with the regulatory authorities in France, which would not even be real news given the dimensions of the group. The case was about the abuse of Google's dominant position, specifically the preferential treatment of its own services in the allocation of online advertising space. As a result, Google now wants to adjust its methods in the auctioning of ads worldwide, which gives the ruling a high impact. The business of brokering ad sales accounts for around 13% of the revenue of Alphabet, the parent company of the group, i.e. in the order of USD 180bn. The adjustment planned by Google will make it easier for competitors to use online advertising tools in the future.

Economic Indicators June 8

MEZ Country Indicator Last period
08:00 GE Industrial Production (April, m/m) +2.5%
10:00 IT Retail Sales (April, y/y) +22.9%
11:00 GE ZEW Economic Outlook (June)  +84.4
11:00 EZ GDP Q1 (q/q) -0.6%
14:30 US Trade Balance (April) USD -74.4bn


Earnings Calender June 9

Country Company Period
AUT Voestalpine Y


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Source: LGT Bank (Switzerland) Ltd.

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